Barbara Ehrenreich memorably called the talk about the
stimulus "clitoral economics." And that was before we
got screwed.
The stimulus deal just announced is being praised more
for its existence than its content. Much lamented
partisan bickering was overcome; bipartisan cooperation
that got it done. With Wall Street bankers in panic,
better something than nothing. So the parties came
together and split the difference and created an
agreement (which still has to survive the minefield
called the U.S. Senate).
It's worth taking a look under the hood. Despite
approval ratings rivaling those of Idi Amin, President
Bush set the terms: Tax cuts only. No spending on public
works (that is, nothing for stuff we need that actually
puts people to work). No increase in food stamps. No
strengthening of our tattered unemployment system. (That
is, no money to those who we know will spend it on basic
needs). Must include a big package of business tax
breaks (tax write-offs for investments that would be
made anyway, according to any reputable economic study).
No money for states that are about to be forced to cut
billions to balance their budgets, largely by cutting
education and Medicaid spending and deferring basic
infrastructure spending. (Remember the bridge that
collapsed in Minneapolis or the sewage valve that shut
down lower Manhattan?)
Democrats, despite having the majority in both Houses,
accepted those terms. They demanded, sensibly enough,
that the tax cuts include 45 million in low-income
families that the president would have excluded. They
demanded the president take extending his tax cuts
beyond 2010 off the table. They got some help for
imperiled homeowners through the Federal Housing
Authority and Fannie Mae.
So only $40 billion of the $150 billion package gets
squandered on business tax boondoggles. The rebates -
what Jesse Jackson calls Wal-Mart gift certificates -
will get handed out by August at best. It might help a
bit, although if the economy is still in bad shape in
August, people are more likely to be paying down credit-
card debt than buying a new TV made in China.
But $40 billion isn't the largest cost. The real price
is the continued misdirection of the economy and
miseducation of the country.
We need what the stimulus package excludes. We need long
term investment in rebuilding America - spending money
on mass transit, on basic sewers and water disposal, on
the electric grid, on renewable energy, on a green
rebuilding of our urban areas, on schools and teachers,
pre-K and affordable college. We need to stop
squandering money abroad in misbegotten wars - now
approaching $1 trillion spent on Iraq. We need to revive
progressive taxation so at the very least hedge fund
billionaires stop enjoying a lower tax rate than their
secretaries. We need to develop a national strategy for
the global economy, ending our addiction to oil, curbing
the casino speculation that will eventually bring down
the house, and balancing our trade with the mercantilist
nations while capturing the new green industries of the
future.
None of this, needless to say, is in the stimulus
package. Instead we're taught the wrong lessons: tax
cuts are good, particularly business tax breaks; lower
interest rates are a free lunch; the "fundamentals," as
the president constantly says, "are good."
In fact, the foundation in crumbling. A fundamental
change of economic strategy and priorities is vital. And
the economic titillation of this bipartisan "stimulus"
package will benefit the politicians with their press
far more than the economy with its perils.